The Bank of Canada cuts rates

• The Dollar sees some weakness... not a lot, but some.

• What's going on in China and Japan?

Good Day... And Tub Thumpin' Thursday to one and all! I don't know where yesterday went... I was downstairs reading emails, articles, and I finally looked at the clock on the laptop, and it said 1:20 pm... I hadn't had lunch yet, and my stomach began to growl... The day was half over and I was still in my pjs! What the heck is going on with time? Well, my beloved Cardinals still couldn't find their bats last night, but eked out a 2-1 victory... My laptop tried to get me to change a sentence about what was going on with time, it thought I was being too harsh... No thanks, I don't need any help!  The J. Geils Band greets me this morning with their song: Give It To Me... I always like the J. Geils Band's sound... 

Well, the STUPID CPI disappointed the markets yesterday, and the dollar went right by to drifting at sea... The BBDXY ended the day 1,235, down 1 index point from the start of the day... That 1-point move was not enough to get the currencies out of their respective sick beds... Gold fought and fought yesterday to get out of the red, but only managed to move the needle so much, and Gold ended the day down $5, at $2,512.40. And that strange anomaly that existed yesterday between Gold & Silver continued throughout the day yesterday, and saw Silver rally, or gain 35-cents, to close at $28.75...  I'm not complaining about Silver gaining while Gold gets sold, I'm just pointing out that this scenario doesn't come along very often...  

Here's MarketWatch.com with their thoughts on the STUPID CPI print: "The consumer price index rose a mild 0.2% in August, the government said Wednesday, in line with The Wall Street forecast.

Yet a measure of prices that strips out volatile food and energy costs, known as the core rate, rose a somewhat stiffer 0.3%. That was a tick above forecast and matched the biggest increase in five months.

The Fed views the core rate as a better predictor of future inflation since food and energy prices can bounce up and down in the short run."

Chuck again... I've always asked: Why would they remove Food & Energy, since those are things, we use every freakin' day! 

The price of Oil remained trading with a $67 handle yesterday, which was a victory for the price of Oil, which had seen daily drops of $1 for the last two weeks...  I told you last week that the pressure on the price of Oil came from what the industry feels is a glut of Oil supply and a lack of demand...  

I read an article on Ed Steer's letter yesterday from a guy who follows Oil and he believes that the call of a Glut of supply is "completely overstated"...  So, then I read what Ed said about the article, and him and I on singing from the same song sheet here... WE both believe that this has election year politics pricing in it....  

The 10-year Treasury didn't move yesterday and ended the day trading with a 3.67% yield... 

And before I go to the overnight markets, I have Ed Steer's thoughts on the manipulation that went on yesterday, here's Ed: "It certainly appeared that the Plunge Protection Team was out in force in most markets once that massaged-to-perfection CPI number came out at 8:30 a.m. EDT yesterday morning. Both gold and silver had their low ticks set long after the DXY hit its high -- and only platinum and palladium were allowed to take off once the DXY high tick at 8:45 a.m. The rallies in both gold and silver were 'delayed'...gold until 10:05 a.m. EDT -- and silver thirty minutes after that.

And it's obvious from their respective Kitco charts at the top of today's column that gold would have certainly closed up on the day by a substantial amount -- and silver far higher than it did, if the collusive commercial traders hadn't show up at 12:45 p.m. EDT in both."

Chuck again... Ed nailed it! Gold would have been the talk of the town but... 

In the overnight markets last night... The dollar got sold a bit more, another 1 index point loss in the BBDXY, which starts today at 1.234... No great shakes in dollar selling, but there was some that had to counted, so that's worth a cup of coffee this morning... Speaking of coffee, I'm going to stop here and go upstairs to get me a cup o' Joe... OK, I'm back now... The currencies still look like they can't get out of their respective sick beds... The dollar selling needs to get stronger before that can happen...  

Gold is up $16 to start our day today... This is a good move considering all the short paper trading yesterday. I say that because the goal (besides to booking huge profits) of the short paper traders is to get investors scared of buying Gold & Silver... So, when you have a day of short paper trading to beat the band, and Gold & Silver rally the next day, it's a good thing for the metals... Of course, it could end up being a bad thing, if the short paper traders see this rally, and think: Well, we didn't do our job, so we need to get back at it.... UHG! 

Silver is up 18-cents to start our day today... The same holds true for Silver... I do want to point out that Platinum and Palladium also get their share of short paper trading... Palladium has been on the rally tracks the past week, and overnight it has gone back over $1,000 to $1,037.00 Good show, boys! 

The price of Oil trades with a $68 handle this morning... So, there's definitely some healing going on with Oil in recent days... And the 10-year's yield is at 3.65% this morning, so more bond buying is going on... 

Well, the Bank of Canada beat the Fed/ Cabal/ Cartel to the punch, and cut rates yesterday... PM Trudeau announced the rate cut on Twitter... To which a long-time friend of mine and one of the best analysts I've ever me, Rick Rule had this to say on Twitter to Trudeau: "Sir, artificially low interest rates subsidize spenders over savers, is that your intention?"

Chuck again... You tell 'em Rick! And in a world of opposites... The Canadian dollar/ loon, didn't budge yesterday... 

Well, the dumping of U.S. Treasuries by foreign Central Banks continues... Yesterday, I was sent two reports 1. China to dump 1 Trillion of U.S. Assests, and the second said: "Japan dumps $60 Trillion of Treasuries... These countries are dead set to de-dollarize, and rid themselves of being chained to the U.S.  And that's something that the debaters should talk about, and not who did what, when and no they didn't...  All that selling won't take place at the same time, as to flood the markets with bonds.,.

These countries will slowly sell them in bits and pieces, until they reach their goals... Of course a "bits and pieces" of $60 Trillion is still a large trade that could move the markets... And when it is confirmed that its the Bank of Japan, long an ally of the U.S., doing the selling, the bond boys will panic and sell their own bonds....  Uh-oh!  

As I've explained many times in the past, the U.S. uses the sale of Treasuries to finance their deficit spending... Well, if Central Bank attendance at the auction window begins to wane.... We'll have a problem, Houston... I'm just saying... 

And if the FOMC does cut rates next week, that will make the new Treasuries that we issue less attractive... And that opens another can of worms, in that the bond boys will begin to ratchet up the yield on the bonds, to make them attractive, and that alone will be a nightmare on Wall Street...  

Boy, I'm full of seashells and balloons this morning, eh? That was my favorite Al McGuire line... He would say, just saying seashells and balloons should put a smile on your face! And now I'm in a happy mood! See how that worked?

Circling back to the Bank of Canada's surprise rate cut yesterday... I'm so let down by the BOC... I remember many years ago, at EverBank, I created a combo CD titled: The Prudent Bank CD.... This CD held currencies from countries that had what I considered to be "prudent"....  I hope they've taken that CD off their offering sheet by now, because there are only a handful of prudent Central Banks and off the top of my head the Central Banks in Russia and Singapore would be the only ones to qualify... 

The U.S. Data Cupboard yesterday had the STUPID CPI print that I talked about above this morning... Today's Data Cupboard has the usual Thursday fare: The Weekly Initial Jobless Claims... Just a hint about the number, last week was a short week so the numbers could be skewed.... We'll also see the August PPI (Wholesale inflation), which will give us an indication of any future consumer inflation... 

To recap.... The STUPID CPI disappointed the markets yesterday, and the Core CPI really threw a spanner in the Fed Head's plans to cut rates... They'll probably still go ahead with a rate cut, but certainly not a Jumbo Rate Cut! The Bank of Canada cut rates, and Chuck isn't happy about that! And China and Japan both announce that they are going to unload boat loads of Treasuries.... 

For What It's Worth... Yesterday, I talked about the article by Morgan Stanley that said the euro would lose 7% if the ECB did Big Rate Cuts... 

Here's your snippet: "The European Central Bank is in a completely different situation. Not only did it already cut rates before leaving on holiday but what matters more is that, at 3.75 per cent, its rate is already a solid 1.5 percentage points below that of its peer across the ocean. This is an inheritance of the 2014-2019 period, when the central bank experimented with negative rates and kept them there for about a year after inflation had started rising.

That course of action means that today the ECB has less room than other central banks to loosen its policy. Never forget: the monetary stance depends on interest rate levels, not changes. The latter are at most indications of possible future levels.

The last reading of headline inflation in the Eurozone, at 2.2 per cent in August, 0.4 percentage points below the July level, provides less comfort than it seems. Core inflation, at 2.8 per cent, did not change. Services inflation, a sticky component representing nearly half of the index, moved up from 4 per cent to 4.2 per cent. The August drop of headline inflation depended fully on a major, but possibly erratic, fall of energy prices. This is an encouraging signal for the future, not a conclusive prompt to act now.

The ECB needs to maintain a moderately restrictive stance to make further disinflationary progress. As its chief economist, Philip Lane, said at Jackson Hole, “the return to target is not yet secure”. The current level of real short-term rates, at some 1.5 per cent or actually lower if one uses core inflation to deflate the nominal rate, is needed for that purpose. The ECB should maintain that level in September.

Christine Lagarde has often stated that the central bank she leads does not follow the Fed but charts its own course, because the two economies are different. The ECB president is right. This September meeting is the occasion to put that statement into practice."

Chuck Again... When will these Central Bankers ever learn? Probably never, because they are thick headed... And the propellers they wear prohibit any novel ideas to enter their brains! 

Market Prices 9/12/2024: American Style: A$ .6685, kiwi .6143, C$ .7362, euro 1.1026, sterling 1.3054, Swiss $1.1733, European Style: rand 17.9209, krone 10.8168, SEK 10.3067, forint 358.85, zloty 3.8801, koruna 22.3230, RUB 91.35, yen 142.06, sing 1.3045, HKD 7.8019, INR 83.97, China 7.1207, pesos 19.76, BRL 5.6447, BBDXY 1,234.30, Dollar Index 101.71, Oil $68.39, 10-year 3.65%, Silver $28.93, Platinum $965.00, Palladium $1,037.00, Copper $4.21, and Gold... $2,528.21.

That's if for today and this week... Well, tomorrow afternoon, I'll be meeting up with some of my fave people... My former colleagues at EverBank... I haven't seen some of them for two years! Ever since I used to hold driveway happy hours, during Covid...  My beloved Mizzou Tigers play Boston College on Saturday... I do believe this could be a trap game for the Tigers, so they need to put that out of their heads and go out and play their game! Maybe one day Mizzou Coach Eli Drinkwitz will have me be a guest locker room inspiration speaker! As IF!  Go Tigers! R.E.M. Takes us to the finish line today with their song: The One I Love.... I saw R.E.M. Years ago, when they were BIG... And I have to say it was quite a show!  I hope you have a Tub Thumpin' Thursday today, and a Wonderful Weekend, and please remember to Be Good To Yourself!